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Obama takes his case on fiscal cliff to the people

Hatfield, Pa.—President Obama renewed his call on Friday for Congress to extend the George W. Bush-era tax rates for middle class Americans as he continues his battle with Congressional Republicans to avert

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HATFIELD, Pa. — President Obama renewed his call on Friday for Congress to extend the George W. Bush-era tax rates for middle-class Americans as he continues his battle with Congressional Republicans to avert the year-end "fiscal cliff."

Obama made his push one day after Treasury Secretary Timothy Geithner met with congressional leaders and presented a plan that included $1.6 trillion in higher taxes over the next decade — including raising rates for wealthy. That offer was rejected by the Republican leadership, which opposes hiking taxes for any Americans.

But using the toy manufacturing plant of K'NEX Brands in suburban Philadelphia as a backdrop, Obama argued his case that Congress needs to give middle-class American families' certainty that their tax rates will not rise by an average of $2,000 on Jan. 1 even as it negotiates the rest of the deficit reduction plan.

"Both of the parties agree we should extend the middle class tax cuts," Obama said. "We got some disagreements about the higher (tax rates) … Let's go ahead and take the fear out for a vast majority of American families, so they don't have to worry about $2,000 coming out of their pockets starting next year.

If Congress doesn't act, Obama said it would be offering Americans a "lump of coal" just in time for Christmas. And failure to act quickly, Obama suggested, might lead to Americans closing their wallets in the midst of the holiday season and hurting businesses like K'NEX, whose products include Tinkertoy and Angry Birds Building Sets.

"It's a Scrooge Christmas," Obama said.

Republicans cast the trip as a campaign-style ploy, and the Republican National Committee grumbled in a memo Friday morning that the "election is over." The White House has scoffed at the notion and argued the president is going to the American people to encourage them to push Congress to act quickly to avert a rise in middle-class taxes.

House Speaker John Boehner, R-Ohio, said Friday talks between his office and the White House had broken down and "fiscal cliff" negotiations were at a standstill. "There's a stalemate. Let's not kid ourselves," he said. "Right now, we're almost nowhere."

The administration's plan is a non-starter for the GOP-controlled House, and Boehner characterized it as an unserious offer. He said he would continue to seek a deal with the president ahead of the end-of-year budget mess when all of the Bush-era tax cuts will expire and the start of $1.2 trillion in spending cuts over 10 years begins. "I'm willing to move forward in good faith," he said.

At heart of Obama's opening gambit in the negotiations is the call for $1.6 trillion in revenues, including $960 billion from raising the top marginal tax rates on wealthy Americans as well as higher taxes on capital gains and dividends and an additional $600 billion from unspecified revenue sources.

But on Friday, Obama kept his message focused on dealing with middle-class tax rates.

"It's not acceptable to me and I don't think it's acceptable to you for just a handful of Republicans in Congress to hold middle-class tax cuts hostage simply because they don't want tax rates on upper income folks to go up," Obama said.

However, Boehner is so far not willing to budge from his opposition to raising individual tax rates on wealthy Americans. "It's the wrong approach," he said.

The next steps are unclear. There are no meetings scheduled between the president and congressional leaders. Republicans have not sent the White House a counter-proposal.

House Minority Whip Steny Hoyer, D-Md., said he did not believe the White House proposal was the end point and there was room to find a deal enough Republicans could support to pass it. "I don't think it's a take it or leave it offer," he said.

Michael Araten, the president and CEO of K'Nex, said Obama's plan would cost him more money personally, but he stood behind the president's plan. Araten said he was optimistic the White House and Congressional Republicans would hatch a deal before the New Year.

"I'm 100 percent confident they will come together at the last minute here," Araten said. "But at the end of the day they will get it done because they recognize it is too important to the American economy, and the American people are watching. When the American people watch, usually our leaders in Washington pay attention."